The Rise of Benefit Corporations: a good intention that raises unexpected concerns

Benefit Corporations – or B Corps – refer to a new organizational model that has experienced an impressive rise in the United States over the past two years. Aiming at emphasizing the socially responsible aspect of a company, the very purpose of this new type of corporation is to ensure that pursuing profit goes hand in hand with benefits for society.

Such a goal is made concrete by asserting specific requirements in the model B Corp legislation. Among these lies the obligation for the boards of directors to consider the impact of their decisions on specific corporate constituencies, including shareholders, employees, suppliers, the community, as well as on the local and global environment.

Thought as a way to give more flexibility to social entrepreneurs, the B Corp has gained general approval in seven states of the United States, including New York, New Jersey and California.

However, some concerns have also been raised, causing to qualify the positive effect that a B Corp label could entail. In fact, some say that this corporation type relies on the false assumption that existing laws compel companies to exclusively maximize profits and share prices and thus undermine the very values that any company should seek to promote: responsibility, awareness and sustainability in the decision-making process.

Far from discrediting the idea of a socially responsible type of corporation, such a concern actually sheds light on the consensus that every company needs to increase its social and environmental awareness. The dichotomy between B Corps and “regular corps” can be deemed irrelevant since there are no legal reasons preventing any type of company to consider a wide range of interests in order to make responsible corporate decisions.

Therefore, if the success of the B Corp model clearly emphasizes the importance and will to give more weight to social responsibility in the corporate world, it should also try not to reduce the primary goal of companies to profit-maximization. As a matter of fact, the B Corp initiative would not be diminished if its advocates urged all companies to consider the interests of its stakeholders and society as a whole rather than providing them reasons not do so.

Want to find out more about B-Corps? take a look at this article on business-ethics.com or look at the B-Corporation label website.